Clara Insurance to Offer New Type of Indemnity Health Product

A team led by Veer Gidwaney, the former chief executive officer of Maxwell Health, is starting a company that will offer a new type of three-tier indemnity health insurance product.

The company, Clara Insurance Inc., says managers of Clara, its new group supplemental health benefit plan, will classify about 13,000 health conditions as moderate, severe or catastrophic.

Employees can decide how rich they want the overall level of benefits to be.

The Clara plan will pay up to $750 in cash benefits to an enrollee who needs emergency room care or urgent care for a moderate condition, such as a broken arm or pneumonia; up to $3,000 in benefits for a severe conditions, such as appendicitis, or a torn meniscus; and up to $15,000 in benefits for a catastrophic condition, such as a stroke.

The payments are based on whether an enrollee has a triggering condition, not the enrollee's medical bills. Enrollees can use the benefits payments however they want to use the payments.

Clara talked about the plan today, when it announced that it has raised $5.5 million in "seed financing," or early-stage financing. Two Sigma Ventures has provided the most financing. The investor group also includes Reinsurance Group of America Inc.'s RGAX LLC.

Clara organizers say in the financing announcement that Clara will be a "modern supplemental benefit, powered by smart technology."

The company says it will start selling the plan in Texas this summer.

The Company

Clara is incorporated in Delaware and has an office in Hoboken, New Jersey.

The insurance powering the company's plan comes from Greenhouse Insurance, a subsidiary of RGA.

Gidwaney is one of the Clara executives listed on the Form D financing forms Clara has filed with the U.S. Securities and Exchange Commission. The other executive named on the forms is Amanda Turcotte.

Gidwaney started his own information technology support company in the Calgary area in 1999, then sold it to Computer Associates in 2006. In 2009, he left to help run Humanity Calls, a fundraising tournament website.

In 2010, he co-founded Maxwell Health, a benefits enrollment system company. Sun Life Financial Inc. bought Maxwell Health in 2019.

Gidwaney began organizing Clara in June 2019.

Turcotte, the company's chief insurance officer, is a fellow of the Society of Actuaries. She started out working as an actuarial assistant at the Guardian Life Insurance Company of America.

Turcotte later spent about seven years working as an actuary at AXA U.S. When she left AXA U.S., in 2016, she was the chief actuary and head of underwriting at the company's employee benefits unit.

For the next three years, Turcotte was chief product officer at a New York-based managing general agency now known as Resilient. Resilient sells insurance products designed for middle-market and low-income people, such as cab drivers, through mobile devices.

Turcotte has been working for Clara since November.

Clara says in the financing forms that it raised $4.5 million from 14 investors in December, and $1 million from five investors starting in March.

The company notes in the financing forms that it was originally named Nightingale Insurance Inc.

The Product

The Texas Department of Insurance filing website shows that Greenhouse Insurance is classifying the Clara product as a form of critical illness insurance.

Employers that offer the plan can buy riders that provide coverage for maternity care, mental health care and chronic conditions. The chronic condition and mental health riders add coverage for about 4,700 conditions.

In a document included in the filing packet, Greenhouse says program managers will sort conditions into the medium, severe and catastrophic coverage tiers using ICD-10 codes.

In a website section aimed at employers, Clara Insurance managers say they structured the product the way they have so that it can cover up to 93% of the conditions that typically require urgent medical care.

"That's 4x more than any of the old-fashioned insurance options," the company says.

A Clara infographic shows that traditional critical illness insurance policies cover about 4% of conditions requiring urgent care, that and traditional accident insurance covers 19% of those conditions.

The company offers a mobile device app that enrollees can use to document their care while they're getting care, by sending in photos of medical bills, medical devices and other images that can substantiate claims.

The broker brochure shows that the product is available to groups with a minimum of 25 lives and at least 10 enrolled lives. To count as an employee, a worker has to be working for the sponsoring employer for at least 20 hours per week.

Clara Insurance and Greenhouse Insurance are selling the product using group insurance contracts. Employers that want to help pay the premiums can do so.

Clara will sell the product to members of eligible groups on a guaranteed issue basis. There are no benefits limitations related to preexisting conditions.

For late entrants, a 60-day benefit waiting period applies.

Employees who leave can take the coverage with them.

The brochures and other materials now available do not appear to describe the kinds of conditions excluded from the overage. Clara Insurance says a complete description of benefits limitations and exclusions is available in the certificate of insurance and riders.

The filing packet includes a letter giving Greenhouse's responses to regulators' questions about the product.

One question regulators asked was whether any other state had approved the product. Greenhouse said Texas is the first that has been reviewing the product.

Another question was whether it was appropriate for Greenhouse to provide coverage for care related to accidents, such as broken arms, in a policy classified as a critical illness insurance policy.

"We recognize this is a somewhat unique product," Greenhouse said.

Greenhouse said it classified the product as a specified disease policy because, "at its core, the insurance provided is a fixed indemnity payment upon diagnosis of a covered condition,' the company said.

Texas regulators also asked Greenhouse how it choose the conditions to cover and classified those conditions.

Greenhouse said it will tell insureds what the plan covers using an electronic app, because the number of ICD-10 codes involved is so large, and that it chose the conditions to cover based on factors such as a condition's financial and social impact, the most likely treatment pathway, and the normal recovery timeline.

"Conditions that are noted to be second or subsequent doctor visits for an initial condition are not covered," the company said.

The Clara plan designers have also avoided covering conditions for which the only treatment is monitoring the condition and using over-the-counter pain relievers, the company said.

— Read New Mexico Freezes the 'Excepted Benefits' Approval Pipeline, on ThinkAdvisor.

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